Richard A. D'Aveni, Professor of Strategic Management

« Back to list of articles

Leaders of the Pack: A Look at Strategies for Securing Market Domination—and Keeping It

Leaders of the Pack: A Look at Strategies for Securing Market Domination—and Keeping It

It's harder than ever for a company to dominate its market these days—or to defend a dominant position. That makes it all the more important to have a strategy to try.

A company with a so-called stronghold is so powerful in a geographic, product or customer segment that it sets the standard for all others in the market in terms of price, performance, reliability and other characteristics. A stronghold represents a company's key source of profitability, its platform for expansion and its power base for attacking its rivals. Companies without one are often spread too thin across many markets or segments, making them vulnerable to more competitors.

For most companies, however, strongholds have become much more difficult to obtain and to hold. Among the reasons: With so much market-research data available, it's typical for several players to converge on the same new territory at once; trends, needs and government regulations change faster than in the past, making strongholds more temporary; and some barriers that once helped defend strongholds are weakening due to converging technologies and globalization.

Yet having a stronghold has never been more important. Increased volatility in financial markets has made Wall Street a less-steady source of capital for many companies. Businesses with solid strongholds, on the other hand, generate the kind of continuous cash flow that Wall Street likes to see, and that a company needs to grow.

Knowing your way around a landscape of strongholds requires familiarity with basic stronghold strategies. Studying such strategies focuses one's attention on competitive questions central for any company: Where will your company dominate? Where will it concede to rivals? How can you secure a stronghold once it is captured? And how does this stronghold need to change to ensure success in the future?

What follows is a look at the essentials—the Five S's of stronghold strategies: securing a defensible stronghold; separating strongholds into non overlapping parts of the market; surrounding rival strongholds to contain them; storming a stronghold by direct or rapid assault; and shape-shifting strongholds by radically redefining the boundaries among strongholds in a market.

Read the full article